Independent Contractors

An independent contractor is an entity or individual not employed by the university who performs a required task or tasks under agreement, and in the contractor’s own manner and method, and is subject to the controls of the university only in regard to the result achieved. An independent contractor’s activities are not controlled or directed by the university or subject to the university’s right to control or direct the task(s) to be performed. Services provided are typically on a task basis, specific in nature, short in duration, and/or sought based on particular professional expertise. Compensation is usually according to an agreed-upon amount or rate, for a given task.

After Human Resources has determined that an individual is an independent contractor, the Business Office must have an invoice from the independent contractor in order to pay. If one was not provided, the contractor should complete the Independent Contractor Invoice (MS Word) for submission.

The individual must also complete the Vendor Information/Substitute W-9 Form (PDF) and submit it, along with the invoice and the approved Independent Contractor Determination Worksheet (PDF) from HR, to the Accounts Payable Department. If the individual is a non-California resident, please also include the appropriate California form (see below), and if a nonresident of the U.S., please include all necessary forms and copies as outlined below.

Nonresidents of California

Independent contractors or vendors who are not residents of California may require additional information.

Payments made to California nonresidents, including corporations, limited liability companies, and partnerships that do not have a permanent place of business in the state of California or that are not qualified through the Office of the Secretary of State to do business in California, are subject to seven percent (7%) state income tax withholding (California Revenue and Taxation Code Section 18662). (When payments exceed $1,500 in a calendar year.)

Types of income subject to withholding include, but are not limited to, payments for services performed in California and payments of leases, rents, and royalties for property (real or personal) located in California. No withholding is required on payments for goods.

California nonresidents who are exempt must complete the California Withholding Exemption Certificate (Form 590) in order to be exempt from this 7% income tax withholding.

CA Form 587: Nonresident Withholding Allocation Worksheet (PDF): The purpose of this form is to provide the necessary information to the Business Office to determine whether a nonresident of California needs to have withholding of 7% taken from their payment. This is required by the California Revenue and Taxation Code (R&TC) Section 18662. California nonresidents who are exempt must complete the California Withholding Exemption Certificate (Form 590) in order to be exempt from this 7% income tax withholding (complete form below).

CA Form 590: Withholding Exemption Certificate (PDF): The purpose of this form is to provide the Business Office with an exemption certification reason. This exempts the nonresident from the state withholding of 7% under California Revenue and Taxation Code (R&TC) Section 18662.

Nonresidents of the United States of America (NRA)

The following is a list of forms required:

Statement of Citizenship form and Federal Tax Status: This form determines whether the individual is considered a resident alien for U.S. tax purposes, if here in the U.S. more than 183 days in the current calendar year; or if 182 or fewer days, the individual is a nonresident alien for U.S. tax purposes.

Vendor Information/Substitute W9 form: If they don’t have a SSN, request a:

W-8BEN: A new form is required every 3 calendar years to recertify information.

Form 8233: This form exempts NRAs from withholding (W/H) on compensation for independent personal services of an NRA individual. It is valid for only 1 calendar year and must be filled out again each year if they want to claim the exemption. If they don’t complete it in a timely manner, before the payment is to be made, then 30 percent backup tax must be withheld and may not be refunded.

CA Form 587 Nonresident Withholding Allocation Worksheet: This form is to be used if the NRA individual will be providing services in California. It is valid for only 1 calendar year and must be filled out again each new calendar year.

If they are not considered a permanent resident, they will need to provide a copy of the following:

I-94: “Arrival and Departure Record”

U.S. Customs and Border Protection has automated this effective March 2013 and no longer provides travelers with a paper form upon entry to the country. However, the traveler can still obtain it after entry by visiting the U.S. Customs and Border Protection website. After completing a short application, the traveler will obtain a valid OMB control number with an expiration date. They should then print that page and submit it to us.

Passport

Visa

The Regulation Under Section 1441 (Forms SS-5 or W-7)

In addition to the above forms, section 1441 requires that all individuals who claim an income tax treaty exemption must have a social security number (SSN) or individual taxpayer identification number (ITIN). APU only requires that they obtain an ITIN, therefore they only need to complete an Application Form W-7. If they ask for help, please refer them to the Business Office. When completing the W-7, the individual must submit it with a notarized copy of their passport, or the form will be rejected. If an ITIN has not been assigned by the time the 8233 Tax Treaty Exemption form is filed, the individual should attach a copy of Form W-7 showing that they have sent in the application of request.Once they receive their ITIN, they must provide the Accounts Payable Department with their number by completing forms 8233 and W8-BEN.

Nonresidents of the United States of America forms

Statement of Citizenship and Federal Tax Status (PDF): The purpose of this form is to provide the Business Office with the individual’s residential status, citizenship status, and any exemption they have, in order to conclude what their federal tax status is, to determine whether federal withholding should be withheld from payments.